Sorry, Bankers, You’ll Never Have an Easy Life
Bankers and regulators alike pine for a simpler world with fewer rules. But there’s no getting around complexity in this day and age.
Getting tangled up.
Source: Bloomberg
It seems blindingly obvious: Banks should not trade shares to help investors claim rebates for taxes they have not paid. Yet, in Germany it took a court ruling just last year to confirm this was illegal a decade after the practice was banned. A string of international lenders are still being investigated; last week, German prosecutors raided JPMorgan Chase & Co.’s Frankfurt offices as part of their probe into the scandal — known as “Cum-Ex” — that’s estimated to have cost taxpayers upwards of 10 billion euro ($10 billion).
This story illuminates one reason why laws and regulations, especially for finance, seem to be getting ever longer and more complicated. Rules can start out simple (OK, tax codes rarely do), but soon someone very smart (or very stupid) will do something that triggers an explicit new prohibition or guideline. With the “Cum-Ex” scandal, this involved adding a stipulation for who could issue certificates for taxes withheld on dividend payments1.